Sarah, a 60-year-old retiree with a $2 million traditional IRA, thought converting $300,000 to a Roth IRA would reduce her lifetime tax burden. Instead, it triggered a $75,000 tax bill and a $5,800 Medicare premium hike—more than she stood to save.
Roth conversions can be powerful tools, but they’re not a one-size-fits-all strategy. For retirees with large IRAs, converting too much—or at the wrong time—can backfire. So when should you avoid a Roth conversion?
Why Do a Roth Conversion in the First Place?
The goal of a Roth conversion is simple: reduce your lifetime tax liability and grow your wealth tax-free. By moving money from a traditional IRA (tax-deferred) into a Roth IRA (tax-free), you're pre-paying taxes now to avoid them later—ideally at a lower rate.
But timing is everything. Done incorrectly, a Roth conversion can increase your tax bracket, spike your Medicare premiums, reduce or eliminate tax credits, and even create liquidity issues. Let’s look at six situations where a Roth conversion might not make sense.
1. You’re in a High Tax Bracket This Year
If you're still earning a high income or receiving large distributions, converting now might mean paying taxes at the top marginal tax rates.
Example: A retiree with a $1.5M IRA who converts $200,000 in 2025 could move from the 24% tax bracket to the 35% bracket, paying over $22,000 more than if they waited for a lower-income year.
Tip: Use future lower-income years—such as the early years of retirement before Required Minimum Distributions (RMDs) begin—as potential Roth conversion windows.
2. You’re Selling a Business or Property This Year
Big income events—like a real estate sale or business exit—can already push you into a high tax bracket. A Roth conversion on top of that only adds to your tax liability.
Example: Selling a business for $500,000 and converting $150,000 from your IRA in the same year could raise your Adjusted Gross Income (AGI) to $650,000, pushing you into the 37% tax bracket and increasing your capital gains tax rate from 15% to 20%.
3. You’re About to Trigger Medicare IRMAA Premiums
Roth conversions increase Modified Adjusted Gross Income (MAGI), which affects Medicare Part B and D premiums through IRMAA (Income-Related Monthly Adjustment Amount).
Example: A couple who converts $150,000 from a $1.2M IRA might push their MAGI to $300,000, far above the 2025 IRMAA threshold of $212,000 for joint filers. The result? A $4,440 increase in annual Medicare premiums—repeating for two years due to the two-year lookback rule.
4. You Don’t Have Cash to Pay the Taxes
Paying the conversion tax from the IRA itself—rather than with outside funds—reduces the amount that goes into the Roth and limits future growth.
Example: If you convert $200,000 but use $50,000 from the IRA to pay taxes, only $150,000 ends up in the Roth. The benefit of tax-free growth is now diminished.
Tip: Only consider a Roth conversion if you can cover the tax bill with non-retirement assets.
5. A Roth Conversion Could Disqualify You from a Tax Credit
Sometimes tax software reveals surprising interactions. One client was eligible for a federal EV tax credit, but a Roth conversion would have pushed their income too high to qualify.
Even a modest Roth conversion can disqualify you from child tax credits, premium tax credits, or clean energy incentives. Always model the full tax picture.
6. You Plan to Give to Charity Using QCDs
For charitably inclined retirees over 70½, Qualified Charitable Distributions (QCDs) may be a better way to reduce taxes. A QCD allows direct IRA-to-charity donations—excluding the amount from taxable income and satisfying RMDs.
A Roth conversion reduces traditional IRA balances, which could eliminate your ability to use QCDs efficiently and cause you realize more taxable income than otherwise needed.
When a Roth Conversion Might Still Be Right
While this article focuses on when not to convert, there are plenty of scenarios where Roth conversions make great sense—especially in low-income years, during widowhood planning, or as part of legacy planning for heirs. The key is knowing when and how much to convert.
The Bottom Line: Strategy Over Simplicity
Roth conversions aren’t inherently good or bad—they’re tools, and tools require a strategy. If you have $1M+ in traditional IRAs, the wrong Roth conversion could cost you tens of thousands in avoidable taxes and penalties.
Before making any moves, consult a qualified advisor who uses tax planning software and understands your full financial picture—not just a spreadsheet or a podcast.
Ready to Build a Smarter Tax Strategy?
At Provista Wealth Advisors, we specialize in strategic tax planning for high-net-worth retirees. Let’s explore if a Roth conversion fits into your long-term plan